By Pawel Kozlowski and Lenka Ponikelska
Nov. 14 (Bloomberg) -- Central European stocks rebounded from a two-week low, with benchmarks in Budapest and Prague posting their biggest gains this month, on earnings reports and as some investors said stock prices were now cheap.
CEZ AS and KGHM Polska Miedz SA led the gains after the companies posted profit that beat analysts' estimates. OTP Bank Nyrt. and Foldhitel es Jelzalogbank Nyrt. surged more than 8 percent each after Hungary's biggest mortgage lenders said earnings increased in the third quarter even as the country's economy contracted in the period.
The Czech PX Index advanced 5.1 percent and Hungary's BUX Index jumped 5.9 percent, the biggest fluctuation among indexes included in global benchmarks.
``Most of negative developments have been efficiently priced in,'' said Jiri Lengal, who manages the equivalent of $115 million of eastern European stocks at Investicni Spolecnost Ceske Sporitelny AS in Prague. ``Stock prices look very attractive now, but we cannot exclude a huge decline.''
The NTX Index of 30 companies in the region advanced 3.9 percent to 895.35 at 1:16 p.m. in Vienna, rising for the first time this week. The measure is still down 55 percent this year. Poland's WIG20 Index gained 2.3 percent, led by KGHM, and Austria's ATX Index added 2.2 percent.
BUX index shares trade at 4.7 percent the average of its members' earnings, compared with about 13 times at the beginning of this year, while PX stocks are at 6.9 times earnings against about 16 times at the start of 2008, according to Bloomberg data.
`Strong Fundamentals'
CEZ, the largest Czech utility, surged 66.2 koruna, or 9.2 percent, to 788.2 in Prague, climbing for the first time in four days. Third-quarter profit rose 46 percent after electricity prices and production from nuclear and hydropower generators increased, the company said yesterday. That exceeded the 11.3 billion-koruna median estimate of eight analysts surveyed by Bloomberg News.
``The results are very strong and confirm the company's strong fundamentals,'' Atlantik Financial Markets AS analysts wrote in a note to clients today.
KGHM jumped 1.64 zloty, or 6.6 percent, to 26.66, gaining the most in two weeks. Poland's sole copper producer posted a smaller-than-expected decline in third-quarter profit as it gained from forward sales on its production that mitigated a plunge in prices.
OTP
OTP, Hungary's biggest bank, advanced 235 forint, or 9 percent, rising for a second day. Third-quarter profit tripled to a record 168.7 billion forint ($802 million) on a gain from the sale of its insurance division.
Foldhitel es Jelzalogbank, the country's second-largest mortgage bank, increased 59 forint, or 8.3 percent, to 770, snapping a three-day drop. Profit increased 21 percent, boosted by lending at its commercial banking unit.
Hungary's gross domestic product fell 0.1 percent in the third quarter from the previous three months, the Budapest-based statistics office said today as the global financial crisis engulfed the country, setting it on a course to follow the euro region into its first recession in 15 years.
For Related News: Stories on Polish stocks: {TNI POLAND STK } TOP stock market news: {TOP STK }
To contact the reporter on this story: Pawel Kozlowski in Warsaw pkozlowski@bloomberg.net; Lenka Ponikelska in London lponikelska1@bloomberg.net
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